9/6/2007
OTTAWA, September 06, 2007 The Financial Consumer
Agency of Canada (FCAC) is informing consumers about a new public commitment by
banks in Canada that reduces the maximum time the institutions can hold funds
from a cheque.
The new commitment, which came into effect in April 2007, shortens the
maximum cheque hold period from 10 to 7 business days. Banks have also
agreed to further reduce this hold period to four days, once electronic cheque
imaging is fully integrated into the cheque clearing process.
FCAC will
monitor banks' compliance with the new public commitment, which applies to
cheques deposited by individual consumers, as well as by small- and medium-sized
businesses. It covers only Canadian cheques in Canadian dollars, drawn on a bank
branch located in Canada.
Currently, cheque clearing involves physically transporting a deposited
cheque, sometimes through several cheque processing centres. Hold periods may be
applied to funds deposited by cheques to protect banks and their depositors. By
applying a hold period, a bank can ensure that there are sufficient funds
available to cover the cheque until it clears and settles.
The Canadian Payments Association (CPA) operates clearing and settlement systems in Canada.
CPA is currently
developing a new system, the Truncation and Electronic Cheque Presentment
(TECP),
which will move the cheque clearing process beyond the current paper-based
system. Under the TECP, a digital image will be taken of a deposited
cheque, allowing it to be processed electronically and more quickly. Once the
new technology is fully established, banks will be able to reduce hold periods
from seven to four business days. For more information on TECP, visit
CPA's Web site at
www.cdnpay.ca.
"Banks must disclose their cheque hold policies in writing when an
account is opened," said FCAC Acting Commissioner Jim Callon. "Consumers should
remember that they have options for avoiding or minimizing the impact of holds
on funds. For example, they can ask their branch manager whether the hold can be
reduced. Also, consumers should consider direct deposit for pay cheques,
government cheques and other regular payments they receive."
For information on other public commitments and codes of conduct, consumers
can contact FCAC
toll-free at 1-866-461-3222. They can also visit the FCAC's Web site at
www.fcac.gc.ca, or the Canadian Bankers Association's Web
site at www.cba.ca.
FCAC ensures
compliance with the consumer protection laws and monitors codes of conduct and
public commitments that apply to banks and federally incorporated trust, loan
and insurance companies. FCAC also provides consumers with accurate, objective
information about financial products and services, and informs Canadians of
their rights and responsibilities when dealing with federally regulated
financial institutions.
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Media contacts:
John Kane
Martine Bélanger
Manager, External Communications
Communications Officer
613-941-8988
613-941-8982
kane.john@fcac.gc.ca
belanger.martine@fcac.gc.ca
